Are you aware of Franchisor responsibilities?

Entering into any Franchisee/Franchisor relationship is an exciting time as it brings about opportunities for expansion and growth. However, franchise owners have a number of responsibilities that they must follow when managing any Franchisee relationship.

In Australia, the ACCC has an in-depth Code which outlines Franchisor responsibilities which are owed to Franchisees. If the Franchisor receives a written request from the Franchisee for disclosure, then the Franchisor must provide such written disclosure.

Examples of disclosure include:

Financial details of the Franchisor
Copies of lease arrangements
If applicable and not known at the time of disclosure, then the Franchisor must disclose 'other matters' as defined by the Code. These include any changes of ownership structure, court proceedings on foot against the Franchisor, and changes to intellectual property and trademark rights.

Once you have entered into a Franchise Agreement, what are common provisions that a Franchisor must provide to Franchisees?

Once the agreement has been entered into, the Franchisor still has a number of obligations to its Franchisees to ensure an effective working relationship continues. These include:

Ensuring that the Franchisee has adequate geographical space to trade. It will be detrimental to any working relationship if you were to enter into an expensive franchise relationship only for another franchise to open up over the road. Hence, if this happens, you must immediately raise this concern with the Franchisor and, if necessary, seek legal advice.
Ongoing staff support is required. Whilst it will be common for each respective Franchisee to hire and terminate individual employment agreements, this does not absolve Franchisors from employment obligations. Often there will be clauses within each franchise agreement whereby the Franchisor will provide ongoing technical support and will provide the appropriate staff in certain situations, such as financial difficulties or legal problems. If this support is not required, you should immediately refer to your respective agreement and then consult a Legal Practitioner who can assist you.
Product and stock supply must be consistent. When you enter into Franchise Agreements, often you are provided the right to utilise the trademarks and property of the Franchisor. For example, if you buy into a coffee franchise, you are provided with the labels and, more importantly, specific stock to sell in your store, such as the coffee beans, cakes and biscuits. If your Franchisor was to not provide you with coffee beans for a week, obviously it would be incredibly detrimental to your business. An ongoing Franchisor obligation (particularly in certain industries such as hospitality) is to provide enough stock and product for you to sell. This may come under ''good faith provisions'' within the Code.
Obligation not to ''churn'' your site. Churning is where a Franchisor knows a particular site is failing to be profitable or successful and yet, instead of shutting down the site, they repeatedly sell the site to new Franchisees. Whilst 'churning' itself has not been regulated by the Code, if it is not disclosed properly upon entering into a Franchise Agreement, then it may constitute misleading or deceptive conduct or unconscionable conduct under the Australian Consumer Law.

How do Franchisees and Franchisors resolve any disputes that may arise?

The relationship between Franchisees and Franchisors is heavily regulated when it comes to dealing with potential disputes that may arise. For example, the Code states that a Franchise Agreement must contain provisions that outline how disputes are to be handled. If a complaint is put in writing and no resolution can be reached in three weeks, then either the Franchisor or Franchisee may refer the matter to a mediator. This can occur either under the terms of the Franchise Agreement or pursuant to the Franchising Code under the ACCC regulations.

Mediation must occur within Australia and, generally, each party will be liable for their own costs of the Mediation. If you receive or issue a complaint, then you should immediately seek legal advice. An experienced Legal Practitioner will be able to assess your case and provide timely advice about the strengths and weaknesses of your claim. A Legal Practitioner will also be able to assess whether the Code is being complied with and whether either party has a genuine complaint.

How can Sharrock Pitman help you?

At Sharrock Pitman Legal, as Accredited Specialists in Commercial Law and Commercial Litigation, we have extensive experience assisting Franchisees and Franchisors in disputes that may arise. Please contact us, and we can also advise you about your rights and obligations under any franchising agreement. Contact our Accredited Specialist in Commercial Law, Mitchell Zadow, on 1300 205 506 or complete the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by a member of our Legal Team

For further information contact

Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

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However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

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Franchisor Responsibilities

Are you aware of Franchisor responsibilities?

Examples of disclosure include:

Once you have entered into a Franchise Agreement, what are common provisions that a Franchisor must provide to Franchisees?

How do Franchisees and Franchisors resolve any disputes that may arise?